A jumbo reverse mortgage is a financial product that allows older homeowners to get access to money without having to sell their property. This option is available for homes valued at $625,000 US Dolalrs (USD) and up. This form of financing is offered to homeowners who are 62 years of age or older.
The idea behind a jumbo reverse mortgage is to access the equity that has built up in the property since it was bought. Equity is the difference between the value of the home and any existing mortgage. The homeowner doesn't need to qualify for this type of mortgage since the amount of the loan is calculated based on the amount of the home's equity as well as the homeowner's age.
When the funds under a jumbo reverse mortgage are advanced, they are used to pay off any debt secured by the property first. After any existing mortgages or secured lines of credit are paid off, the homeowner is given the balance of the loan funds. Closing costs for the reverse mortgage are also deducted from the loan proceeds.
As long as the borrower is living on the premises, he or she is not required to make any payments on the loan. The funds obtained through a jumbo reverse mortgage can be released in as a lump sum or as monthly payments. Another option for getting the money is as a line of credit.
With this last option, the homeowner has a lot of flexibility. He or she can access funds as needed, up to the available limit. Interest on the money doesn't start to run until they are taken from the line of credit.
With a jumbo reverse mortgage, a homeowner can use the money for any purpose that makes sense to them. The funds can be used to pay for living expenses or to clear off unsecured debt. Some homeowners who decide to get a jumbo reverse mortgage use the funds to pay for travel or to help their children or grandchildren financially.
The jumbo reverse mortgage is a good choice for older homeowners who need to access a significant amount of funds. If you are considering this option and you only need a relatively small amount of money, a better choice may be to apply for a home equity loan. However, if you need to access a larger amount of cash, this may be the right option for you.